Professional Documents
Culture Documents
Projects
Group-7:
Type of
Introduction Construction
Projects
Building
Industrial
Commercial
Pay a pre-determined fee that was agreed upon
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at the time of contract formation
• The final price is known, by the • A great deal of work should be done by the
owner, before the work contractors prior to preparing the estimate. It is
commences wasteful of a skilled estimator’s time
• The contractor has more • Changes in drawings and specifications can be
Lump Sum incentive to reduce his cost to very expensive and source of trouble. In other
increase the profit words the contract has very limited flexibility for
Contracts • The contractor hopes to complete
design changes
the job as quickly as possible, to • The contractor carries much of the risks. The
(Contd..) minimize overhead, to maximize
profit and to move to the next
tendered price may include high risk
contingency
Job
• Competent contractors may decide not to bid to
• Minimum Owner supervision avoid a high-risk lump sum contract
related to quality and schedule.
• Hard to build relationship. Each lump sum
• Contractor selection is relatively project is unique.
easy.
Number One Number Four
In Admeasurement Contracts, items of The contract offers a flexibility for the
work are specified in Bills of Quantities or client to introduce changes in the work
Schedule of Rates defined in the tender documents.
Bill of
NUMBER FOUR NUMBER FIVE NUMBER SIX
Quantities Payment is made on the basis of
units of work actually done and
Re-determination of unit prices
when substantial quantity
Useful on projects where the
nature of the work is well defined,
(or) measured in the field multiplied
by the unit prices.
deviations occur is stipulated in
contract conditions.
but the quantities of work cannot
be accurately determined in
advance of construction.
Unit Price
Contract Suitable for highways, dams, airports…
For example, painting is typically done on a square foot basis. Unit price contracts are seldom used
for an entire major construction project, but they are frequently used for agreements with
subcontractors which involve accurate identification of different types of items, but not their
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numbers, in the contract documents. They are also often used for maintenance and repair work.
Advantages Disadvantages
rates
contract NUMBER FOUR NUMBER FIVE
- Term Contract Used for repair and maintenance works or under
conditions of urgency. This contract is best suitable
The contract price is derived by measuring the
man-hours, plant-hours and the quantities of
for repetitive works. materials actually consumed, and then pricing
or Measured them at the tendered price.
Term Contract
Demolition, Geotechnical investigation, Excavation, Concrete work, Roofing and tanking, Fire shutters,
Plasterwork, floor, wall, ceiling finishes, Plumbing and drainage including cable ducts,
Fixtures, fittings and soft furnishings.
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Advantages Disadvantages
Variations are easier to estimate and normally Additional resources are required to measure
cheaper than on fixed price traditional 01 work and certify payments.
Schedule of contracts.
rates
The client can stop and start work at a pace that
might be determined by cash flow or funding.
02 The client does not have a final price when
committing to starting work.
Main Aspects
1. The owner pays all costs of construction with a fixed sum of money. The fee is fixed and does
not fluctuate with the actual cost of the project.
Advantages
1. There is no incentive for the contractor to inflate costs.
Cost plus Fixed 2. There is incentive for the contractor to complete the work as quickly as possible since his fee
fee remains constant.
Disadvantages
1. Major variations create problems. The fee must be re-negotiated to take account of such
variation. Also. The speed of commencing the work is undermined since before a fee can be
agreed a fairly detailed description of work must be made.
Cost Reimbursement Contracts- Major Types
Main Aspects
1. The contractor and owner agree to a target estimate of construction.
2. Bonus or penalty arrangements are tied to this target figure.
3. The work must have a fairly definite nature. Drawings and specifications must be sufficiently
Target Cost with developed to enable a reasonably accurate cost to be determined.
Variable Fees Advantages
1. There is an incentive to carry out the work as quickly and as economically as possible.
Contract 2. The client also stands to benefit through the contactor's efficiency.
Disadvantages
1. Difficulties may arise in agreeing on a revised target cost if there are major variations
2. A tight cost control must be exercised, which may be difficult and/or costly
Main Aspects
1. The contractor guarantees to construct the project in full accordance with the drawings and
Guaranteed specifications and that the price to the owner will not exceed some total upset price.
2. If the price of the work exceeds the assured maximum, the contractor pays for the excess.
Maximum Price 3. Contracts are often competitively bid in a manner similar to that for lump sum contracts, but
Contract managed as cost plus.
4. The successful bidder is determined on the combined basis of his quoted maximum price and
fixed fee.
Selection Methods
1. Qualification/Quality Based Selection: 2. Direct Selection
Institutions, corporations or public Used by an individual who has a
agencies (sometimes represented by a relatively small project
committee) use this method
The client selects an architect on the
Chooses an architect on the basis of basis of
professional qualifications and Reputation
competence Personal acquaintance or the
To achieve an objective comparison, QBS recommendation of a friend, former client
How to uses predetermined, value-based criteria
that may include such factors as:
or another architect
Roster of architects – employ using a
rotation system
select an The architect’s history and capability to
perform required services
Related experience such as past
3. Architectural Design Competitions:
performance on similar types of projects Used to select both an architect and a
Architect? Familiarity with local geography and
facilities
design for both public and private
projects
Experience and skills in project
management Architects submit solutions to a
Design approach/methodology particular problem and are judged on
the comparative excellence of their
Other selection criteria may include submissions
Reputation
Rapport
Successful architect is usually awarded
the commission for the actual project
Technical competence
Commitment to the client’s interests Competitions may be “open” (to all
Client’s desire for imagination and architects) or “limited” (by invitation to
ingenuity a restricted number of architects).
Prepare a well-researched
Commit to a quality-based
project brief or project
selection (QBS) process or ‘two
development plan, including an
envelope’ methodology
adequate budget and program
8 Elements
Use an appropriate tendering
of Successful Select the architect before
selecting the secondary
system that matches submission
demands with project
consultants
Procurement complexity
of an
Use QBS criteria to evaluate Appoint an experienced
Architectural proposals selection panel
Project
Determine pre-set fees (using
Use a consultancy agreement
data derived from the ACA
that fairly allocates risk and is
Architects’ Time/Cost
insurable
Calculation Guide)
Allocating Risk to
the Party That Is in
the Best Position
to Control That
Risk
Mitigation Measures
Adding Protection Backing Up
Measures by Including
Additional Insured
Indemnity
Provisions With
Requirements Insurance
Insurance Is a
Property/Builder’s
Fundamental Way
Risk Coverage
to Manage Risk
Thank you…!!